Hilcorp holding line or scaling back plans at five Cook Inlet units; sees promising results from last year’s drilling at Kenai unit

Eric Lidji

for Petroleum News

Hilcorp is planning a light year of development activities at its five federally managed Cook Inlet units: Swanson River, Beaver Creek, Kenai, Beluga River and Birch Hill.

The local subsidiary of the Texas-based independent plans to drill between one and three new wells or sidetracks at the Swanson River unit during the current development year, which runs through March 2019. The company listed one potential well, SCU 33-33RD, in its newest development plan and described the other two as “possible.” The company is also planning workover activities at the existing SCU 322C-04 and SCU 44-04 wells.

In addition to its drilling plans, Hilcorp is continuing a field study of the Hemlock formation at the Swanson River unit to identify remaining reserves, particularly in the Upper Hemlock. “The inventory of sidetrack candidates will be vital for economically reaching these smaller/less economic targets,” the company explained in its plan.

In the previous development year, running through March 2018, Hilcorp had initially planned to drill one well, SRU 241-33, and potentially four additional wells or sidetracks, and it had also planned to conduct workover activities at an existing well, SCU 44-33.

The company brought the SRU 241-33 well into production in September 2017 and reported cumulative production of 16.6 million cubic feet by March 2018. The company described the four additional wells or sidetracks as “not possible” during the year. The company ultimately cancelled its proposed workover activities at SCU 44-33, choosing instead to recomplete the existing SRU 32C-15, SCU 22B-04 and SCU 12B-09 wells.

The Swanson River unit produced 6.69 billion cubic feet of natural gas and 691,200 barrels of oil in 2017, entering the year at 4 million cubic feet and 1,850 barrels per day and finishing the year at 4 million cubic feet and 1,750 bpd of oil. The decline fell short of company goals to maintain or increase production through development.

Beaver Creek

To the southwest, Hilcorp is not planning any new wells at the Beaver Creek unit during the current development year, but it proposed a new sidetrack, BCU-05RD2. The company is also not planning any workover activities at the unit during the current year.

In its previous development plan, Hilcorp proposed no new drilling projects. The company initially proposed a workover project targeting Sterling B3 gas production at the BCU 25 well but later redirected the capital toward other projects in its portfolio.

The Beaver Creek unit produced 57,800 barrels of oil and 4.72 billion cubic feet of natural gas in 2017, according to figures provided by the company in the plan.

Kenai

Farther to the southwest, Hilcorp is not planning any drilling or workover activities at the Kenai unit. In its plan for the previous development year, Hilcorp proposed as many as eight new wells at Kenai - four wells in the Deep Tyonek participating area, two wells targeting the Beluga/Tyonek gas pool, and as many as two additional unidentified wells or sidetracks. The company also proposed as many as 10 coil tubing workover projects, as many as 10 e-line recompletions and as many as five rig workover projects at the unit.

Hilcorp ultimately drilled three new wells during the year.

The company drilled the KBU 32-06 well into the D-4B interval of the Tyonek formation in April 2107. The well was producing 460,000 cubic feet per day in March 2018. The company drilled the KU 14-05 well into the D-6B interval of the Tyonek formation in May 2017. The well was producing 190,000 cubic feet per day in March 2018. The company drilled the KU 11-07X well into the D-3B interval of the Tyonek formation in August 2017. The well was producing 3.9 million cubic feet per day in March 2018.

Given the “exceptional results” of these three development wells and also “current gas market constraints,” Hilcorp deferred the three remaining wells in its proposed drilling program for 2017 as well as the 25 proposed workover operations to “future years.”

Beluga River

On the west side of Cook Inlet, Hilcorp is not planning any drilling activity at the Beluga River unit during the current development year but is planning several undefined workover projects for later this summer. The company operates the unit on behalf of several partners, including Municipal Light & Power and Chugach Electric Association.

In its previous plan, the company made no firm drilling commitments and ultimately did not drill any new wells, focusing instead on overhauling seven compressors at the unit.

The unit produced 14.9 billion cubic feet in 2017, down from 17.4 billion in 2016.

Birch Hill, Sterling

In the Cook Inlet basin, Hilcorp also operates the Birch Hill unit at the northern end of the Kenai Peninsula, but the U.S. Bureau of Land Management has yet to approve the plan for 2018. The previous development plan included a proposal to test an existing well at the unit in the hopes of returning it to production over a three-to-six-month period.

The BLM is also in the process of terminating the Hilcorp-operated Sterling unit.

The federal agency initially proposed unit termination in December 2016, although subsequent development plans by Hilcorp had deferred any decision on the matter.